World Economics – Outcome 2 Dionne Rendall
Question 7
The UK balance of payments are made up of; * The financial account balance * The capital account balance * The current account balance
The financial account balance takes account of the sale of assets and purchase of them, i.e. loans, property, bank deposits and cross-border exchanges.
In relation to the capital account balance it consists of the monetary values relating to the transfer of ownership of things such as land, and records the outflows and inflows from people that are selling abroad and purchasing.
The current account balance is made up of the balance of trade in goods, the balance of trade in services and the income balance and the current transfer balance. Collectively they show the money spent by a country on exports and the amount they have spent on imports, in regards to the UK they are exporters and importers of holidays and education. Question 8 Looking at the current balance from 1980 to 1920, it is clear that the UK has had a significant increase in the value of goods they have been able to export which enables them to be seen as a large contributor to the market. Due to the Global Financial Crisis of 2007-2008 this accounts for the lowest figure to date for the UK’s balance of trade in goods and services of -£36,733. There has been an increase of 859.6% between 1997 and 2012 of the quantity of oil imported to the UK, as oil is a necessary fossil fuel it is a necessary purchase regardless of the price which was at its lowest in 1997 at $15.04 US Dollars and had risen to $105.42 US dollars in 2012. This contributes greatly to the negative figures from 1997 onwards, along with the increased imports of other fuels, tobacco and foods and beverages.

Question 9

Price of Goods – Year 2013
UK Price: £1,100
USA Price: $1,500

Exchange rate: £1